March 15, 2006

 

US Wheat Outlook on Tuesday: Seen 2-4 cents lower on follow through sales

 

 

U.S. wheat futures are forecast to begin Tuesday's session 2-4 cents lower on follow through from Monday's sharp declines and weaker prices overnight, sources said.

 

In overnight e-CBOT trading, May wheat fell 2 1/2 cents to $3.65 per bushel and July lost 3 3/4 cents to $3.75 3/4.

 

Overnight at the KCBT, May dropped 3 3/4 cents to $4.31 and July fell 3 1/2 cents to $4.34.

 

There is nothing positive out this morning, a floor analyst said. The forecast continues to expect rain in the U.S. Central Plains at the end of the week, the weekly crop conditions in Kansas showed a slight improvement, and the concerns about the mad cow news is not a positive for the markets, he added.

 

Dry conditions with only a few light showers are expected Wednesday and Thursday in the U.S. Central Plains with additional light showers forecast on Friday, DTN Meteorlogix weather said. Scattered showers and thundershowers are possible Saturday and Sunday with rainfall potential .25 inch in the southwest and .25-1.00 inch and locally heavier in the north and the east, Meteorlogix added.

 

Several states released their weekly wheat crop conditions. In Kansas 29% of the winter wheat crop was rated good-to-excellent as of March 12 as compared to 27% for the week ended Mar. 5. In Texas, 4% of the wheat crop was rated good-to-excellent, unchanged from the previous week. In Oklahoma, 72% of the wheat crop was rated in poor-to-very poor condition.

 

News that the U.S. Department of Agriculture reported that a cow in Alabama tested positive for BSE or mad cow disease is also not positive for the grain markets, a floor analyst said.

 

On technical charts, Monday's losses have damaged the near-term technical picture and confirmed a short-term top on the daily bar chart, a technical analyst said. He sets first resistance in CBOT May wheat at $3.71 and then at Monday's high of $3.77 1/2. First support is seen at $3.63 and then at $3.61 1/2.

 

The May KCBT wheat contract is within striking distance of important chart support at the $4.30 1.2-$4.30 area, the March 3 and March 1 lows, the analyst said. He pegs first resistance in that contract at $4.39 1/2 and then at $4.46, with first support at $4.34 and then at $4.30.

 

At the CBOT, there were 239 deliveries posted against the March wheat contract, the customer account of ABN Amro issued 238 contracts while the customer account of UBS Securities stopped 239 contracts.

 

At the KCBT 14 contracts were posted for delivery. The customer account of ADM Investor Services issued 10 contracts while the house account of Term Commodities stopped 13 contracts.

 

In other wheat news, the severe frosts in January and insufficient snow cover have resulted in Russian winter grains being damaged on 2.5-2.8 million hectares, or 18%-20% of the total planted area, according to the Russian national weather center Rosgidromet.

 

Japan's Ministry of Agriculture, Forestry and Fisheries is seeking to buy 113,000 metric tonnes of wheat from the U.S. and Canada in a tender to be concluded Thursday, a ministry official said Tuesday. 85,000 metric tonnes is expected to be of U.S. origin.

 

South Korean flour mills are jointly seeking to buy 23,500 metric tonnes of U.S.-origin wheat in a tender to be concluded Wednesday, a trader in Seoul said Tuesday.

 

Tuesday is the last trading day for the March wheat contracts.